Well, we’re nearing the end of 2010 with much fanfare. While enjoying the holidays with friends and family, we also take stock of the year and look ahead to the future.
In terms of the gold markets, there’s a lot to take stock of.
Gold is completing another strong year, seeing around a 26% gain over last year. It’s in fact the 10th straight year gold has gone up and a situation that hasn’t been seen in nine decades according to Bloomberg.
In 2010, gold reached another non-inflation adjusted high of $1432/oz, just recently in fact, on December 7th. Just today it hit a two-week high of around $1406 on news of a sinking U.S. dollar, which experienced an abrupt 0.6% decline (… in the dollar index – .DXY), its biggest drop in two weeks.
In addition to investor interest, jewelry and industrial demand, central banks in Asia, Africa and South America are seeing gold more and more as a reservable asset and thus, growing their gold holdings according to independent investor Dennis Gartman. This of course is coming at the expense of both the EURO and U.S dollar he says.
Ian Anderson, a JPMorgan Asset Fund Manager, said recently “I’ve never been a long-term advocate of gold as an alternative to currencies, but it has now adopted that role.”
Expect gold to shine in the next year
While many factors play into how gold is priced, much of the analysis out there points to another strong year for gold in 2011. Many of the fundamentals are there – sovereign debt fears in Europe and even the U.S., low interest rates and increasing demand. Much of the latest rise in gold is attributable to increasing demand from investors, financial institutions and even central banks.
Adding to the positive gold outlook is the fact its increase hasn’t been a vertical move…it rises for 2-3 months, and then pulls back for a month or two. We’ve been seeing this scenario play out for well over a year now.
But remember, corrections and consolidations are inevitable
What we don’t want to do is imply every day is going to be a bright day for gold. Corrections and consolidations in any market are inevitable and gold is no different. While $1600/oz gold is not out of the question, it may seem like a bumpy ride getting there.
And of course, there are things that could happen to derail gold’s current trends like stronger than expected performance in other markets, stronger economic growth and even a technical selloff. Some even argue gold is perhaps in a bubble and slated to go down dramatically.
Most people we talk to and read don’t think so right now but it pays to always consider alternatives. However, most don’t see a gold bubble at this time because the way the market has handled itself…we haven’t seen the straight vertical moves (like tech stocks in the 90’s and housing in the last decade) to consider gold a bubble.
With all of this in mind, we’re certainly looking ‘goldly’ (…rather than boldly) into the New Year.
Let us just end by saying that it’s been a wonderful year. We look forward to providing you up-to-date market analysis, investment resources and the best selection of gold bars and coins into 2011 and beyond.
Happy New Year!!!
QE 1,2,3 what are they printing for ?Bernanke dose not give a dam The whole Fed is a sham. Then comes QE4 QE5 you’ll struggle just to stay alive. And with Q6, The Rothschild’s have another fix, getting richer from dirty tricks. Can it go as high as QE8 ? Americababwe just cant wait.